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Wednesday, July 23, 2014

Using a company to pay less property tax

Should landlords form a company to reduce their tax liablities.  This excellent updated guide from Taxcafe goes through the implications with worked examples and is now available at the Property Hawk taxation bookshop.

Subjects covered include:

* How companies are taxed - the clearest explanation you will find anywhere.
* All the benefits and drawbacks of using a company.
* How to cut your tax bill by 40% with a company.
* How to reduce your tax bill by an extra 30% by bringing your spouse/partner into the company.
* How company owners can enjoy massive additional tax savings by varying their income from year to year.
* Tables showing the exact tax savings you could enjoy by using a company.
* How corporation tax reductions in 2013, 2014 and 2015 are making companies even more attractive as tax-saving devices.
* Other important tax issues including home office expenses, motoring and travel expenses, pension contributions, borrowing money and property taxes.

One consideration before incorporating a company to hold your residential investment portfolio is the administrative burden of running a limited company so any landlord going down this route will have to carefully weigh the tax savings with the 'hassle factor'.  Have a look at this recent post about setting up a limited company to administer a letting business.

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